Today I downloaded the free app from Android Market, "ACCleaner".
One of it's primary functions is to clear the device's cache of built up data, images etc, which limits the amount of storage your device has left.
This information is not necessary for the operation of the device, and not being very knowledgeable about such things, I wonder why a phone would have a cache? I think the concept is that quicker access can be had to things previously looked at, - but I might be wrong.
Anyhow, this app lists all the apps on your device, showing how much data each app has stored in cache. Some store a lot, others none.
One tap on the word "Delete" clears all the cache. Another app I have tests all the apps downloaded for malware, and it advises this app. is clean.
If you have a look at all the reviews from users, they will attest this is a great app, providing their devices with extra storage by clearing out the junk.